September 15, 2000

Record spending helps
boost demand for beef

Consumer spending for beef set a new record during the first half of 2000, indicating the continued increase for overall beef demand, and helping to confirm industry projections that spending, consumption and overall demand will continue on a steady pace throughout the rest of the year.

According to the Beef Demand Index, calculated by independent economic and industry experts using USDA per capita beef consumption data and USDA Choice retail beef prices adjusted for inflation, beef demand has remained strong during the first half of the year. Incorporating recently released preliminary second quarter data, beef demand during the first half of the year averaged 5.2 percent higher than demand during the first half of 1999. Based on current economic conditions and projected beef supply and retail prices during the second half of 2000, expectations are that demand will remain above 1999 levels through the rest of the year.

Cattle-Fax, a private market research firm, says the current state of beef demand correlates with several economic factors, primarily increased consumer spending and higher per capita income.

This is happening at a time when average retail fresh beef prices for the first half of 2000 are expected to be up slightly—14 cents a pound (5 percent) compared to the first half of 1999. Supermarket retailers, recognizing the increased demand for beef, continue to actively feature and promote beef to encourage consumer purchases.

Randy Black, Cattle-Fax chief operating officer, expects beef’s share of total meat spending to grow in 2000 for the first time in 20 years (by about 0.5 percent to 40.3 percent and the largest share since 1997).